Calculating Tragedy: Assessing the Costs of Terrorism

36 Pages Posted: 13 Dec 2004

See all articles by Bruno S. Frey

Bruno S. Frey

CREMA; University of Basel

Simon Luechinger

University of Lucerne

Alois Stutzer

University of Basel - Faculty of Business and Economics; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 2004

Abstract

The trends and consequences of terrorist activities are often captured by counting the number of incidents and casualties. More recently, the effects of terrorist acts on various aspects of the economy have been analyzed. These costs are surveyed and put in perspective. As economic consequences are only a part of the overall costs of terrorism, possible approaches for estimating the utility losses of the people affected are discussed. Results using the life satisfaction approach, in which individual utility is approximated by self-reported subjective well-being, suggest that people's utility losses may far exceed the purely economic consequences.

Keywords: Terrorism, subjective well-being, life satisfaction, utility loss

JEL Classification: D74, H56, I31

Suggested Citation

Frey, Bruno S. and Luechinger, Simon and Stutzer, Alois, Calculating Tragedy: Assessing the Costs of Terrorism (November 2004). CESifo Working Paper Series No. 1341; IEW Working Paper No. 205. Available at SSRN: https://ssrn.com/abstract=599742

Bruno S. Frey (Contact Author)

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
Switzerland
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

Simon Luechinger

University of Lucerne ( email )

Frohburgstrasse 3
P.O. Box 4466
Lucerne, 6002
Switzerland

Alois Stutzer

University of Basel - Faculty of Business and Economics ( email )

Peter Merian-Weg 6
4002 Basel
Switzerland
0041 61 267 3361 (Phone)
0041 61 267 3340 (Fax)

HOME PAGE: http://www.wwz.unibas.ch/stutzer/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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